Rebalancing the RCN

A few weeks ago my good buddy David McDonough was quoted in the National Post as arguing for the need to rebalance the distribution of Canadian naval
ships between West and East.“Nowadays, the threat on the East Coast is
pretty mild, whereas the Pacific
is a more dangerous environment.”

The well-known Canadian military historian Jack Granatstein published an op-ed a few days later, basically echoing the sentiment. “Canada has national interests in the peace of the Pacific,” he wrote, “and it makes sense for us to re-balance the
RCN’s fleet.

The navy, however, got wind of these clippings and issued its own rather forthright response: “There are no plans to redistribute RCN ships from the Atlantic fleet to the Pacific
fleet…our ability to deploy our ships abroad when and where needed on behalf of the Government of Canada is not restricted by where our ships are based.”

This is an interesting argument, but not one that holds up to
muster. If half-circumnavigating a continent was easy there would be no need for America to stage ever more ships deep in the
Pacific. Panama Canal or not, Halifax is still a long ways from the Orient.

Conceding this flaw, the Navy continues: “In the last decade, the
Canadian Government has repeatedly deployed the Canadian Armed Forces to the Middle East and to the Caribbean and these regions will remain the most likely areas of operations for the CAF for
years to come.” In short: leave the Eastern fleet alone, because it serves the theatres we think are the greatest threat.

All this reminded me of something I wrote a while ago in a side project. My argument was that a) Canada is a huge resource-exporting nation, b) whereas
European demand has likely leveled off, China’s economy has shown an insatiable appetite for foreign resources, and c) since you can only get to this market by sea, the navy should shift its
focus of operations.

Economic gravity models predict that, allowing for distance, trade is attracted towards economic mass.[1] The most direct consequence of China’s reemergence will therefore be a reorientation of the Canadian
economy towards the Pacific. Currently, merchandise exports to the European Union outstrip those to China more than 3:1.[2] This balance is reflected in the distribution of maritime shipping. On the Atlantic coast, an average of 350 merchant vessels and over 150 fishing vessels can be found at work every
day. In contrast, a slightly lower daily average of over 400 vessels are operating within the Pacific region.
[3] However, as detailed in table 4.1, Europe’s share of the world economy is in relative
decline. As a result, while China (and, in fact, the rest of Asia) continues to plow ahead, market opportunities with Canada’s traditional trading partners will remain flat.
Meanwhile, Asian waters will become busier and busier, as raw materials destined for China are in turn traded for manufactures loaded in shipping containers and then sent to the rest of the
world. As Canadian firms move to meet this growing demand, more ships will be loaded at Canadian ports and more will transit through Canadian waters—particularly if the artic circle route
emerges as a viable transportation option. In short, the combination of Europe’s relative economic decline and China’s inexorable quest for more resources and expanding domestic market will
shift the balance of Canadian commercial interest to the Far East.

Such an economic reorientation will have considerable strategic implications. Among the foremost will be a need to rebalance the deployment of
Canada’s navy. Navies are built to defend maritime interests. Consequently, as these become ever more focused on growing Asian markets, so too will the need for an enhanced Pacific
naval presence. Given that the number of principal surface combatants stationed on the East coast currently outnumber those on the West by 3:2,[4] the navy will have to shift considerable resources across the continent to keep pace with the Pacific
boom. Given that Asia’s economy is set to grow by six-fold, while Europe’s will not quite triple, the navy will face considerable pressure to ramp up West coast operations.

The only thing I would add now is that the Navy doesn’t seem to get that the Middle East and Central Asia don’t need our soldiers and ships. As I’ve
argued ad nauseam, winning in Kandahar is not life or death for Canadian security. The Suez still matters, but we can probably depend on the Egyptian army to keep it open—they need
the hard cash. As for the most hardened of the region’s jihads, they can only be defeated on the battlefield. But the US drone program has demonstrated far more success than
any Provincial Reconstruction Team. Not even Saudi oil is as valuable as it once was, thanks to North America’s shale oil and gas revolution.

The Pacific, by contrast, is a place that matters plenty. And just as NATO exercises in the North Atlantic were necessary to remind the Northern Red
Banner fleet that her submarines were not without escort, close naval ties with Japan, Taiwan, Korea are needed to dissuade any revisionist intentions Beijing may harbour. A navy that fails
to recognize that this strategic interest looms above all others should probably hand over command of the tiller.

[1]This model was first identified by Walter Isard in "Location Theory and Trade Theory: Short-Run Analysis," Quarterly
Journal of Economics, vol. 68, (1954), p. 305- 322. More recent proponents include Elhanan Helpman and Paul Krugman. See also Robert C. Feenstra, James R. Markusen, and
Andrew K. Rose, “Using the Gravity Equation to Differentiate among Alternative Theories of Trade,” The Canadian Journal of Economics, Vol. 34, No. 2. (May, 2001), pp. 431.
Finally, a World Bank presentation on the Gravity Model can be found at http://info.worldbank.org/etools/BSPAN/PresentationView.asp?PID=416&EID=217.